The Larkspur Furniture Company needs a new grinder. Compute the present worth for thesemutually exclusive alternatives and identify which you would recommend given i-10% per year.Larkspur uses a 10-year planning horizon.Alternati veABInitial Cost$4500$5500Annual Costs$300$400$05 years 10 yearsSalvage Value$500Lifea) PW costs of alternative Ab) PW costs of alternative Bc) Which one do you recommend? Explain why.

Net present worth is defined as the present value of the total cash flows over a period. In other…

Answered: The Larkspur Furniture Company needs a…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Use AW analysis. Texas Popcorn Corporation is planning to fully automate it process. The company CEO is currently looking into three options. Options A costs $450,000, AOC of $55,000, and salvage value of $85,000 after 3 years. Option B will cost $720,000 with an AOC of $68,000 and salvage of $95,000 after 4 years. Option C cost $800,000 with an AOC of $95,000 and salvage of $125,000 after 6 years. Which machine should the company select at an interest rate of 10% per year? Assume the project service life is 12 years. Use AW analysis to solve.
An electronic circuit board manufacturer is considering six mutually exclusive cost-reduction projects for its PC-board manufacturing plant. All have lives of 10 years and zero salvage value. The required investment, the estimated after-tax reduction in annual disbursements, and the gross rate of return arc given for each alternative in the following table: llte rate of return on incremental investments is given for each project as follows: Which project would you select according to the rate of return on incremental investment if it is stated that the MARR is 15%?
You are the design consultant comparing two pump options. The first option has an installation cost of $34,000 and lasts 40 yearswith $1,000 maintenance every 10 years. The second option has an installation cost of $30,000 and lasts 40 years if a largerefurbishment of $15,000 is conducted after 20 years. Assuming a 4% MARR, Pv option 1 pv option 2 which option is the best
The following data pertain to an investment proposal (Ignore income taxes.): Cost of the investment $ 36,000 Annual cost savings $ 11,000 Estimated salvage value $ 4,000 Life of the project 5 years Discount rate 13% Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the proposed investment is closest to: (Round your intermediate calculations and final answer to the nearest whole dollar amount.)
Compare the Annual Worth of the two systems and identify the better option at MARR = 10% per year: Solar: First cost $1,500,000; AOC $-700,000; Salvage value $100,000; Life of 8 years Geothermal: First cost $2,250,000; AOC $-600,000; Salvage value $50,000; Life of 8 years Select the Geothermal System with a calculated AW of $-1,017,368 Select the Geothermal System with a calculated AW of $-727,591 Select the Solar System with a calculated AW of $-1,238, Select the Solar System with a calculated AW of $-972,416
Problem 4. Which project would you select on the basis of rate of return, assuming MARR =15%. Please use excel spreadsheet to answer.
If a garden center is considering the purchase of a new tractor with an initial investment cost of $127,000, and the center expects a return of $31,000 in year one, $21,000 in years two and three, $15,000 in years four and five, and $12,000 in year six and beyond, what is the payback period? ______ years
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Find the expected EUAW from the financial data provided in the table for new equipment. Because of the uncertainty of technology being used in this equipment, it has not been possible to get the initial cost accurately. The annual benefit, however, is estimated to be $25,000 with a possible equipment life of 5 years. The salvage value is expected to be 10% of the initial cost. MARR = 8%. First Cost, $ $60,000 $80,000 $100,000 $120,000 Probability 0.25 0.35 0.30 0.10 Choices: A. $3957 B. $2977 C. $4628 D. $5157 Determine the associated risk measure in this equipment investmest in terms of standard deviation. A. $6,123 B. $4437.80 C. $8,523 D. $4,923
How would I solve this? Thanks!

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